Highways and Growth : A Causal Analysis for India
DOI:
https://doi.org/10.17010/aijer/2018/v7i4/131654Keywords:
Causality
, Agglomeration, Network Externalities, Roadways, Human-Capital, Crowding OutO18
, O47, R41Paper Submission Date
, June 15, 2018, Paper sent back for Revision, August 16, Paper Acceptance Date, August 28, 2018.Abstract
The paper investigated the relationship between the growth of highways and economic growth. We tested for mutual causality between the growth of road networks (which were functionally divided as state highways and national highways) and growth in investment and GDP. We employed time series data set containing observations of growth in road route kilometres by type for India over the period from 1972 - 2016 to fit a vector autoregressive model with exogenous variable describing the growth in road networks, GDP, and gross capital formation. We also checked if the establishment of National Highway Authority of India (NHAI) had any significant impact on the economy. The results indicated the existence of bidirectional causality between growth in GDP and growth in national highways and a unidirectional causality was seen from growth in national highways to growth in gross capital formation. Additionally, it was observed that the growth in state highways led to subsequent growth in national highways as well. The NHDP programme had a significant impact on the expansion of national highways, but no causal influence could be empirically identified on GDP and gross capital formation.Downloads
Downloads
Published
How to Cite
Issue
Section
References
Aschauer, D.A. (1989). Is public expenditure productive ? Journal of Monetary Economics, 23 (2), 177 - 200.
Aschauer, D.A. (1990). Highway capacity and economic growth. Economic Perspectives, Federal Reserve Bank of Chicago. Retrieved from https://core.ac.uk/download/pdf/6793236.pdf
Banerjee, A., Duflo, E., & Qian, N. (2012). On the road : Access to transportation infrastructure and economic growth in China (NBER Working Paper No. 17897). Retrieved from http://www.nber.org/papers/w17897
Boarnet, M. G., & Chalermpong, S. (2001). New highways, house prices, and urban development: A case study of toll roads in Orange County, CA. Housing Policy Debate, 12 (3), 575 - 605.
Boarnet, M.G. (1997). Highways and economic productivity: Interpreting recent evidence. Journal of Planning Literature, 11(4), 476 - 486.
Brueckner, J.K., & Fansler, D.A. (1983). The economics of urban sprawl: Theory and evidence on the spatial sizes of cities. Review of Economics & Statistics, 65 (3), 479 - 482.
Chi, G. (2010). The impacts of highway expansion on population change: An integrated spatial approach. Rural Sociology, 75 (1), 58 - 89.
Datta, S. (2012). The impact of improved highways on Indian firms. Journal of Development Economics, 99 (1), 46 -57.
Duranton, G. (2015). Roads and trade in Colombia. Economics of Transportation, 4(1- 2), 16 - 36.
Eberts, R. W. (1990). Public infrastructure and regional economic development. Economic Review, 26 (1), 15-27.
Fujita, M., Krugman, P., & Venables, A.J. (1999). The spatial economy. Cambridge, MA : The MIT Press.
Gibbons, S., Lyytikäinen, T., Overman, H., & Sanchis - Guarner, R. (2010). Productivity and employment impacts of agglomeration: Evidence from transport improvements (Unpublished Paper). Retrieved from personal.lse.ac.uk/gibbons/papers/draft_nov10_ueam.pdf
Gibbons, S., Lyytikäinen, T., Overman, H., & Sanchis - Guarner, R. (2012). New road infrastructure : The effects on firms (Spatial Economics Research Centre Discussion Paper No.117). Retrieved from http://eprints.lse.ac.uk/58527/1/__lse.ac.uk_storage_LIBRARY_Secondary_libfile_shared_repository_Content_SERC%20discussion%20papers_2012_sercdp0117.pdf
Iacono, M., & Levinson, D. (2016). Mutual causality in road network growth and economic development. Transport Policy, 45, 209 - 217.
Jiwattanakulpaisarn, P., Noland, R.B., Graham, D.J., & Polak, J.W.(2009) Highway infrastructure and state-level employment: A causal spatial analysis. Papers in Regional Science, 88 (1), 133 - 159.
Kumar, G., Dhingra, N., & Saihjpal, M. (2012). Determinants of FDI inflows to developing countries of Asia. Arthshastra Indian Journal of Economics & Research,1(2),15-25. doi:10.17010/aijer/2012/v1i2/54483
Lakshmanan, T.R. (2011). The broader economic consequences of transport infrastructure investments. Journal of Transport Geography, 19 (1),1-12.
Lakshmanan, T.R., & Anderson, W.P. (2007). Transport’s role in regional integration processes. European Conference of Ministers of Transport., & Round Table on Transport Economics. (2007). Market Access, Trade in Transport Services and Trade Facilitation. Paris: Organization for Economic Co-operation and Development.
Madan, P. (2014). Foreign direct investment : Governance and infrastructure - A study across Indian states. Arthshastra Indian Journal of Economics & Research, 3(4), 17-31. doi:10.17010/aijer/2014/v3i4/55984
Martincus, C.V., Carballo, J., & Cusolito, A. (2017). Roads, exports and employment: Evidence from a developing country. Journal of Development Economics, 125, 21 - 39.
Mera, K. (1973). Regional production functions and social overhead capital: Analysis of the Japanese case. Regional and Urban Economics, 3 (2), 157- 185.
Ministry of Finance. (2015). Economic survey (2014-15). New Delhi : Government of India.
Ministry of Finance. (2018). Economic Survey (2017-18). New Delhi : Government of India.
Ministry of Road Transport and Highways. (2016). Road transport yearbook (2015-16). New Delhi : Government of India.
Moore, T., & Thorsnes, P. (1994). The transportation/land use connection. Washington, DC: American Planning Association.
Munnell, A.H. (1990). Why has productivity growth declined ? Productivity and public investment. New England Economic Review (January/ February 1990), 3-22.
Nadiri, M.I., & Mamuneas, T.P. (1998). Contribution of highway capital to output and productivity growth in the US economy and industries. Report prepared for the Federal Highway Administration, Office of Transportation Policy Studies. Retrieved from https://www.researchgate.net/publication/239657902
National Highway Authority of India. (2016). Annual report (2015-16). New Delhi , Ministry of Road Transport and Highways, Government of India.
Owen, W. (1959). Special problems facing underdeveloped countries : Transportation and economic development. American Economic Review, 49 (2),179 -187.
Pradhan, R., & Bagchi, T. P. (2013). Effect of transportation infrastructure on economic growth in India: The VECM Approach. Research in Transportation Economics, 38 (1), 139 -148.
Shepherd, B., & Wilson, J. S. (2007). Trade, infrastructure, and roadways in Europe and Central Asia: New empirical evidence. Journal of Economic Integration, 22 (4), 723 - 747.
The World Bank. (2014, August 25). Highways. Retrieved from http://www.worldbank.org/en/country/india/brief/highways
Thiel, F. I. (1962). Social effects of modern highway transportation. Highway Research Board Bulletin, 327, 1-20.
Tripathi, S., & Gautam, V. (2010). Road transport infrastructure and economic growth in India. Journal of Infrastructure Development, 2 (2), 135-151.
Vickerman, R. W. (ed.). (1991). Transport infrastructure in the European community: New developments, regional implications and evaluation. In, Infrastructure and regional development. European research in regional development (Vol. 1, pp. 251 - 269). London : Pion.
Vikerman, R. (2008). Transit investment and economic development. Research in Transportation Economics, 23(1), 107 - 115.
Voss, P.R., & Chi, G. (2006) Highways and population change. Rural Sociology, 71(1), 33 - 58.
Weber, J. (2012). The evolving interstate highway system and the changing geography of the United States. Journal of Transport Geography, 25, 70 - 86.
Wisenbaker, V. B. (1973). The effects of the interstate highway system on the population of non metropolitan countries in the South (Unpublished Doctoral Dissertation). University of Georgia, Athens.
